On June 29, the Korea Chamber of Commerce and Industry released its survey of 2,470 manufacturing firms, revealing that the Business Survey Index (BSI) for the third quarter rose by four points to 80, up from 76 in the previous quarter. While the index for export-oriented companies jumped 16 points from 70 to 86, the index for domestic firms remained stagnant at 78.
A BSI above 100 indicates a positive outlook for the quarter compared to the previous one, while a score below 100 reflects a negative sentiment among businesses.
The semiconductor sector recorded a BSI of 113, exceeding the baseline for the third consecutive quarter, followed by cosmetics at 100 and shipbuilding at 95. The electronics and telecommunications sectors both rose to 93, and electrical equipment increased to 92, benefiting from a global trend of increased investment in AI infrastructure led by major tech companies.
In contrast, the non-metallic minerals sector, which includes cement, ready-mixed concrete, and glass, fell 18 points to 61, marking the lowest score among the surveyed sectors. This decline is attributed to a slump in construction demand and reduced activity due to the rainy season. The petroleum and petrochemical sectors also saw an increase of 8 points to 64, but concerns over oversupply of petrochemical products from China led to a prevailing negative outlook.
The uncertainty stemming from the Middle East conflict has created significant disparities in sentiment among businesses of different sizes. Large and mid-sized companies, which had previously experienced a sharp decline, rebounded to scores of 88 and 86, respectively, up from 57 and 70 in the previous quarter, while small businesses maintained the same score of 78.
When asked about potential changes to their management and operational plans due to the Middle East conflict, 55.6% of responding companies indicated they would make adjustments. Those revising their plans cited specific changes, including adjustments to "prices and delivery costs" (59.3%), "raw material procurement scale and methods" (56.4%), and "operating costs" (41.5%). Other considerations included "production volume and utilization rates" (32.1%), "new investment scale and timing" (19.7%), as well as "exchange rate and raw material hedging" (10.6%), "policy financing and subsidies" (10.5%), "market financing" (8.6%), "bypassing the Strait of Hormuz" (7.9%), and "alternative export destinations" (5.5%).
A manufacturing industry representative stated, "It is difficult to say that the risks from the Middle East have been completely resolved, and the burden of high exchange rates continues. There remains significant uncertainty in terms of raw material procurement and cost management."
Kang Min-jae, head of the economic policy team at the Korea Chamber of Commerce and Industry, noted, "While the manufacturing outlook is improving, the uncertainties stemming from the Middle East situation, along with high prices and exchange rates, are increasing the operational burdens for the manufacturing sector. The government needs to focus its policy efforts on managing exchange rate volatility and stabilizing raw material supply, as well as developing support measures to alleviate the burdens on companies due to fluctuations in energy and raw material prices."
* This article has been translated by AI.
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